Quantum Computing Inc., listed on NASDAQ under the ticker QUBT, saw an upward shift in its shares on Thursday. This movement followed Rosenblatt Securities analyst John McPeake's recent initiation of coverage, during which he affirmed a Buy rating and established a price target of $22 per share.
Investment Thesis and Financial Assessment
McPeake's coverage initiation is predicated on Rosenblatt's assessment that Quantum Computing presents a compelling risk-reward profile. This is substantiated by the company's diversified quantum and opto-electronics technology assets, a cash-rich balance sheet, and augmenting capabilities in fabrication. The analyst underscored the company's possession of strategic resources spanning photonics, computing, security, and sensing domains, supported further by its thin-film lithium niobate (TFLN) fabrication facilities.
Financially, Quantum Computing reported approximately $1.6 billion in cash reserves with no outstanding debt. Notably, the company's income from interest currently surpasses its operating expenses, indicating a healthy runway to fund ongoing operations and development. McPeake emphasized that Quantum Computing exhibits "a lot of ways to win and plenty of cash to get there," reflecting confidence in operational flexibility and potential pathways to profitability.
Acquisition and Revenue Expectations
Integral to Rosenblatt's positive outlook is Quantum Computing's planned acquisition of fabrication assets from Luminar's LSI division. This strategic move is anticipated to contribute an additional $25 million in annual revenue, enhancing the company's financial performance and broadening its production capabilities.
Regarding current revenue metrics, Rosenblatt estimates that Quantum Computing generated about $400,000 in 2024. Projections for 2025 indicate a revenue increase to roughly $1.2 million, exclusive of contributions from the Luminar asset acquisition. These figures, while modest, represent early-stage commercialization and expansion within a nascent market.
Product Portfolio and Fabrication Infrastructure
The company's active product shipments include optimization software, a quantum random number generator, photonic reservoir computing tools, and various laboratory and research equipment. Progress in fabrication infrastructure is marked by the anticipated completion of Quantum Computing's first TFLN fabrication facility in the second quarter of 2025. This facility will support the development of internal products and cater to clients with low-volume manufacturing needs.
Looking ahead, Rosenblatt highlighted plans for a second TFLN fabrication facility with higher volume capacity, which could significantly scale production output and bolster revenue opportunities. This expansion points to the company's commitment to strengthening its manufacturing base in alignment with market demand.
Valuation and Stock Technical Analysis
Rosenblatt's price target of $22 is derived from a valuation framework that takes into account long-term revenue and earnings projections. The valuation is appropriately discounted to reflect Quantum Computing's early revenue status and developmental stage.
From a technical perspective, Quantum Computing’s stock currently trades approximately 12.8% above its 20-day simple moving average (SMA) but remains 13.8% below its 100-day SMA. This reflects a mixed technical environment for the share price. Over the past twelve months, the shares have appreciated by 10.82%, situating closer to the lower range of their 52-week trading band, which may imply some level of trader caution.
Further indicators include a Relative Strength Index (RSI) sitting near 55.07, which is considered neutral, suggesting the stock is neither overbought nor oversold at this time. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator is above its signal line, signaling the presence of bullish momentum. The combination of neutral RSI and bullish MACD points to mixed momentum, inviting investors and traders to monitor critical price levels for insights into upcoming price action.
Market Position and Momentum Assessment
Benzinga Edge rankings provide additional context on Quantum Computing's stock performance against market benchmarks. The stock earned a Momentum score of 13.16 out of 100, indicating underperformance relative to broader market trends. This low momentum score signals that the stock may face challenges in gaining stronger market traction in the near term.
As of the latest trading session, Quantum Computing shares were priced at $12.76, marking a 2.01% increase, according to Benzinga Pro data. Despite short-term upward movements, investors may remain cautious due to mixed technical and momentum indicators.
Summary
Quantum Computing's recent analyst coverage initiation by Rosenblatt sets a Buy rating with a price target significantly above current market levels. This confidence is largely driven by the company's robust cash position, growing fabrication assets including the acquisition of Luminar's LSI assets, and a diversified technology portfolio spanning photonics and quantum applications. Nevertheless, the company's revenue remains at an early stage, and current market momentum indicators present a nuanced picture requiring further observation. The company's strategic investments in manufacturing infrastructure may serve as a catalyst for scaling operations and translating technology assets into sustainable revenue streams over time.